The Financial Conduct Authority will grant mortgage advisers, brokers and distributors a three-month grace period after its regulatory overhaul of the sector is implemented in April 2014, during which time applications for loans that are in progress can continue on a non-advised basis.
Revealed in its latest quarterly consultation paper, the FCA stresses that the waiver applies solely to the new rules that redefine the vast majority of mortgage transactions as advised. It does not give any exemption from any other new rules such as responsible lending.
Under the Mortgage Market Review, which comes into force on 26 April 2014, most transactions where the consumer consults with a distributor from either the lender or a third party will be classified as ‘advised’ and must follow toughened rules on suitability accordingly.
The exemption will allow transactions that are already “in the pipeline” to process up to 26 July 2014. The FCA said this will prevent consumers from facing “unnecessary delays and costs”.
The consultation paper also proposes a modest change to the rules regarding advised transactions to clarify that situations wherein a consumer is simply recommended to seek a mortgage from a particular lender - but where no specific product is discussed - will be considered ‘advised’.
Final rules had previously stated that in such situations the process would be considered non-advised, unless the lender in question only offered a single product.
The changes will be applied to the Perimeter Guidance Manual and will therefore also relate to general insurance transactions, the FCA states. The consultation closes on 6 August 2013.
